All Forum Posts by: Ed L.

I've got enough equity in my current home to pay cash for the property once my current home sells... In the mean time I would get either a 1yr interest only or a 5yr fixed 20yr balloon note from my local bank.

Can I submit an offer as a Owner occupant even though I already own a home??

I plan to live in my current home while I make the necessary repairs and remodeling..... I probably wouldn't start moving into the home until I managed to get a contract on my current home.

I'm really looking forward to NO MORE MORTGAGE...

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Originally posted by Will Barnard:

Ed,
Just a suggestion, however, in my experience, banks will very unlikely accept and often just ignore an offer that is only 59% of their ask price.

Now, that stated, you have two things going for you here (ok, actually 3) 1. The property has a 40+ DOM 2. It already was contracted then fell out of escrow meaning bank and the asset manager are much more willing to accept another offer that is all cash and lower than previous. 3. You are all cash and can go with no contingencies.

Since your exit value is slightly above $100k, for rehabbers, you can pay up to 70% all-in of exit value and still turn a nice profit. With that in mind, if your exit is accurate (and not best case) at $120k, then 70% of that is $84k, minus your repairs of $50k on high end, then your max offer can be $34k which is 81% of list price. In my experience, bnaks will look at and can accept offers within the 80% of ask price range (can go lower, but not typical).
So, if I were you, I would be offering $31k-$32k, then when they counter with a higher number or highest and best, you only go up to the $34k. You have left only a small amount of room for your increased counter which lets the bank know your first offer was just about your highest and bvest already. At a $25k offer, you stand the risk of getting ignored or not taken seriously.

Now, this all said, I do not know your market like I know mine, so please take this for what it is worth.

Will,

When the house first came on the market my goal was 35k purchase price.

I'm hoping that the previous buyer brought some of the more significant issues to the attention of the seller. 10K pool repair, 2,500 foundation repair, Ac Not working, etc, etc.

I believe that is the case because they have reduced the price twice in the past month and have still failed to get another offer. It smells like blood in the water.

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I hope the OP didn't go too deep into RE investing in 2007...

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I'm about to test some of the theories of this discussion tomorrow morning. I was considering attaching photos of the foundation problems & some old termite damage. Guess I will forego that method in favor of a cash offer with no contengencies..

REO property listed for 42,000
Has been on the market for 40+days
Previous Contract Fell through.
Repairs 40,000-50,000
ARV--- $120,000
Offer---$25,000
Non Refundable EMD XXX???

Someone posted on here that your offering too much if you are constantly getting acceptances... That's my new moto..

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When analyzing comps for a flip I try to look for properties that will be similiar, yet still inferior to the subject property once all the rehab work is finished...

I generally pick 3-5 comparables. Divide the sales price by the sq/ft and that gives you a price per sq/ft... Take the average price per sq/ft and multiply it by the size of the subject property....

One draw back to that method is non conforming properties... ie.. 4,000sq/ft home in a 2,000 sq/ft neighborhood... The additional space will probably fail to yield a proportional increase in value/final sales price...

That being said... Appraising is never 100% accurate.. In this market I want my product to be better than the comparables at a cheaper price.

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It's really hard to compare Long term hold to Rehab/flipping.

Rehab and flipping is a great way to make money in a relatively short time.

Long term hold properties are a good way to build long term wealth through rental income, & property appreciatinon.

For example... Say that your newly formed joint venture has 50K in cash to invest. For simplicity sake I will say that you intend to buy with cash and choose not to leverage.

Flip- Buy property for $25K + $25K Improvements, then sell in 3 months for 75K= 25K profit... Would be a 50% profit in 3 months. Annualized that would be 200% return...

Buy & Hold... Buy 1 rental property for 50K. Rent for $1000 monthly. = 12,000 Gross income x 50% = Net income of $6,000...That would be a annual return of 12%...

Buy and hold may be more consistent and seemingly easier, but it has additional headaches pertaining to dealing with renters & owning property..

So far my favorite form of long term investing has been my commercial office building that houses my RE Office... I also like the commercial leasing because people tend to keep their business space much more tidy than their leased home/apartment.

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Wow! thanks for sharing the article..

I read somewhere that the average price of a home in china was equivalent to 50+years income.. That should be a very interesting bubble.

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I own my RE brokerage, so my advertising cost are pretty much diluted to the point of not mattering. Do a 2-3% co-op.

Best ROI I have seen comes from Realtor.com's premium membership... Provides much better visibility on the worlds largest Re site.

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Here's my situation.

I have a duplex scheduled to close on the 23rd.

My plan was to use a credit line from my last flip to purchase the property with 0 down. Hold the property on the credit line for 6-12 months for seasoning and then refi out with a fixed 15 yr mortgage.

Unfortunately, my banker informed me today that my credit line was closed when the last property was sold and that I would need to put up 15% to do the deal. He did offer to do a un secured LOC to get my Down Payment back after closing.

I've got no problems coming up with the 15%, but I really wanted to let the deal stand on it's on.. (I think I can make alot more money with my cash by flipping instead of rental)

When I go to refi out 6months-1yr from now.. Would it be possible to get a refi amount to cover my loan and my cash down payment????

Purchase price is $57,000 (Out of State Owner that went Bankrupt)

Sold Comps from the past 6 months puts the value at 100-120K.

Gross Monthly Lease is $1,300

Here are my Options

1) Pay cash for the down payment- Buy property with 1yr Interest only.

2) Use LOC for the Down Payment- Buy property with 1yr interest only.

3) Pay cash for the property

4) Do a 5yr ARM with 15% down.

Would any of these methods allow me to refi 100% of the original purchase price in the next 6months-1yr???

Sorry to keep bombarding with overly complicated questions...

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Originally posted by Ann Bellamy:

Mubasher, no one can answer your question, because you haven't given enough information.

First you have to find what it will likely sell for QUICKLY once it's repaired. The after-repaired-value. And I wouldn't rely on the real estate agent trying to sell you the house to give you an accurate value, because her goal is to sell you the house. But certainly it's a starting point.

Then you need an estimate of repairs by someone qualified to do such an extensive rehab. Including basement waterproofing. Also, you should understand that a house that truly has to be torn down isn't worth much more than a building lot, because the cost of demo and removal has to be taken into consideration.

So start with those two points, and then we can give you a better idea.

I would add that it is worth less than a building lot due to the cost to teardown..

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All Forum Posts by: Ed L.

Ed L. has started 43 posts and replied 449 times.

Post: Owner Occupant Clause on Fannie Mae

Post: Techniques: Getting the bank to accept your offer

Post: The Risks- my financial advisor

Post: Techniques: Getting the bank to accept your offer

Post: Running comps and determining what's a deal...

Post: Holding a property for 20 years or more

Post: The US is cheap! (relatively speaking)

Post: How Much Do You Spend Marketing Your Property?

Post: Buying Rental 0 Down

Post: to buy or not to buy? This is my first deal....help!!